H0577B1137A00509 MAB:EJH 05/09/23 #90 A00509
AMENDMENTS TO HOUSE BILL NO. 577
Sponsor: REPRESENTATIVE GAYDOS
Printer's No. 1137
Amend Bill, page 1, lines 1 through 17; page 2, lines 1
through 30; page 3, lines 1 through 8; by striking out all of
said lines on said pages and inserting
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in tax credit and tax benefit administration,
further providing for definitions; and establishing an
employee retirement account tax credit.
Amend Bill, page 3, lines 11 through 30; pages 4 through 32,
lines 1 through 30; page 33, lines 1 through 29; by striking out
all of said lines on said pages and inserting
Section 1. The definition of "tax credit" in section 1701-
A.1 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, is amended to read:
Section 1701-A.1. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Tax credit." A tax credit authorized under any of the
following:
(1) Article XVII-B.
(2) Article XVII-D.
(3) Article XVII-E.
(4) Article XVII-G.
(4.1) Article XVII-G.2.
(5) Article XVII-H.
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(6) Article XVII-I.
(7) Article XVII-J.
(8) Article XVII-K.
(8.1) Article XVII-L.
(9) Article XVIII.
(10) Article XVIII-B.
(11) Article XVIII-D.
(12) Article XVIII-E.
(13) Article XVIII-F.
(14) Article XVIII-G.
(14.1) Article XVIII-H.
(15) Article XIX-A.
(15.1) Article XIX-C.
(16) Article XIX-E.
(16.1) Article XIX-F.
(17) Section 2010.
(19) Article XX-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
(20) The act of December 1, 2004 (P.L.1750, No.226),
known as the First Class Cities Economic Development District
Act.
(21) 12 Pa.C.S. Ch. 34 (relating to Infrastructure and
Facilities Improvement Program).
(22) Any other program established by a law of this
Commonwealth in which a person applies for and receives a
credit against a tax. This paragraph shall not apply to a
credit against a tax liability as a result of an overpayment.
* * *
Section 2. The act is amended by adding an article to read:
ARTICLE XVII -G.2
EMPLOYEE RETIREMENT ACCOUNT TAX CREDIT
Section 1701 -G.2 . Scope of article.
This article establishes an employee retirement account tax
credit.
Section 1702 -G.2 . Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Administrative costs." The costs incurred by a qualified
taxpayer to offer employee retirement accounts to the qualified
taxpayer's employees. The term does not include any amounts
deposited in an employee retirement account.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to the taxes imposed by Article III,
IV, VII, VIII, IX or XV.
"Department." The Department of Revenue of the Commonwealth.
"Employee retirement account." An employer-sponsored
retirement plan described by section 401(k) of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(k)).
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
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(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified tax liability." The liability for taxes imposed
under Articles III, IV, VI, VII, VIII, IX, XI and XV. The term
does not include tax withheld under section 316.1.
"Qualified taxpayer." A business firm that meets all of the
following:
(1) Offers an employee retirement account to each of its
employees for the entire period during which the tax credit
is claimed.
(2) Employs at least two employees who reside in this
Commonwealth.
"Tax credit." The employee retirement account tax credit
provided under this article.
Section 1703 -G.2 . Rate and procedure.
(a) Rate.--The tax credit shall be equal to the total amount
of administrative costs incurred to the qualified taxpayer in
the prior calendar year.
(b) Application.--
(1) A qualified taxpayer may apply to the department for
a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed by the qualified
taxpayer for the prior calendar year. The application must be
on a form developed by the department.
(3) The department may require information necessary to
document eligibility for the tax credit.
(c) Review and approval.--
(1) The department shall review and approve or
disapprove each application by March 20.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit awarded.
Section 1704 -G.2 . Use.
(a) Initial use.--Prior to sale or assignment of a tax
credit under section 1706 -G.2 , a qualified taxpayer must first
use a tax credit against the qualified tax liability incurred in
the taxable year for which the tax credit was approved.
(b) Eligibility.--The credit may be applied against up to
100% of the qualified taxpayer's qualified tax liabilities
incurred in the taxable year for which the tax credit was
approved.
(c) Application.--The tax credit shall be applied against
the qualified taxpayer's qualified tax liabilities only after
all other statutory tax credits and deductions available to the
qualified taxpayer have been used.
Section 1705 -G.2 . Carryover, carryback and refund.
A tax credit may not be carried back, carried forward or be
used to obtain a refund.
Section 1706 -G.2 . Process for sale or assignment.
(a) Authorization.--If a qualified taxpayer holds a tax
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credit through the end of the calendar year in which the tax
credit was granted, the qualified taxpayer may sell or assign
the tax credit, in whole or in part.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the department. The application must be on a
form developed by the department.
(2) To approve an application, the department must
determine that the applicant has:
(i) filed all required State tax reports and returns
for each applicable taxable year; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the department and not
under timely appeal.
Section 1707 -G.2 . Purchasers and assignees.
(a) Sale or assignment.--Upon approval by the department, a
qualified taxpayer may sell or assign, in whole or in part, a
tax credit.
(b) Time.--The purchaser or assignee must claim the tax
credit in the calendar year in which the purchase or assignment
is made.
(c) Amount.--The amount of the tax credit that a purchaser
or assignee may use against any one qualified tax liability may
not exceed 100% of any of the qualified tax liabilities for the
taxable year.
(d) Resale or reassignment.--
(1) A purchaser may not resell or reassign the purchased
tax credit.
(2) An assignee may not resell or reassign the assigned
tax credit.
(e) Notice.--The purchaser or assignee shall notify the
department of the seller or assignor of the tax credit in
compliance with procedures specified by the department.
Section 1708 -G.2 . Pass-through entity.
(a) Election.--If a pass-through entity has an unused tax
credit, the pass-through entity may elect in writing, according
to procedures established by the department, to transfer all or
a portion of the credit to shareholders, members or partners in
proportion to the share of the entity's distributive income to
which the shareholders, members or partners are entitled.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Amount.--The amount of the tax credit that a transferee
under subsection (a) may use against any one qualified tax
liability may not exceed 100% of any qualified tax liabilities
for the taxable year.
(d) Time.--A transferee under subsection (a) must claim the
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tax credit in the calendar year in which the transfer is made.
(e) Sale and assignment.--A transferee under subsection (a)
may not sell or assign the tax credit.
Section 1709 -G.2 . Reports to General Assembly.
By October 1, 2024, and October 1 of each year thereafter,
the department shall submit a report on the tax credit provided
by this article to the chairperson and minority chairperson of
the Appropriations Committee of the Senate, the chairperson and
minority chairperson of the Appropriations Committee of the
House of Representatives, the chairperson and minority
chairperson of the Finance Committee of the Senate and the
chairperson and minority chairperson of the Finance Committee of
the House of Representatives. The report must include the names
of the qualified taxpayers utilizing the tax credit as of the
date of the report and the amount of tax credits approved for or
utilized, sold or assigned by a qualified taxpayer.
Section 1710 -G.2 . Expiration.
This article shall expire December 31, 2029.
Section 3. This act shall take effect immediately.
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